Law At Work: It's not in my contract

Ian Watson highlights the importance of a written contract

CONTRACTUAL RIGHTS have hit the headlines in recent weeks.

On the one hand, bankers have insisted that their generous bonuses must continue to be paid despite the recession (and public funds being put in to support their company) because they have a contract which entitles them to performance-related payments.

In sharp contrast to the bankers, low-paid civil servants are facing major reductions in their (albeit generous) redundancy pay – despite having a contractual entitlement to redundancy pay. The Government now proposes, because of the present financial climate, to cut it back.

This suggests that the way in which employment contracts are drafted is of considerable significance to both employers and employees. It is therefore of some concern that many employees have never had a written statement of their main terms and conditions of employment – even though they have a legal entitlement to such a document. Frankly, in the event of a dispute about employment, evidence of the contractual relationship can be of just as much assistance to the employer as to the employee.

Keeping the written contract up-to-date, as well as making it relevant to the developing employment relationship, is often lower down the list of the employer’s priorities than business survival. But, arguably, business survival (and jobs) may depend on the employer ensuring that the employment relationship is properly described in the contract and that sufficient flexibility is built in to the contract to enable the best possible deployment of labour within the organisation.

Flexibility, of course, can work both ways in employment. An employee who habitually carries out tasks that are not in their contractual job description can find that, at some future point, their contract has been changed, through custom and practice, to encompass the new duties.

But the reverse can also be true. If an employer turns a blind eye to widespread departure from the precise terms of a contract to the employees’ advantage – for example, finishing early every day - they can find that reverting to the original contract terms may be problematic. ‘Custom and practice’ is a double-edged sword.

There is no doubt, however, that an employment contract with no flexibility to it may result in unnecessary disputes between partners and staff. The challenge for partners and practice managers is to find the ideal combination of flexibility (for example in job role, hours or place of work) without relying on draconian contractual flexibility terms which may either create resentment amongst staff or be, in practice, difficult to implement without legal challenge from employees.

Staff who are properly consulted and whose individual concerns about contractual change are addressed may well be amenable, particularly in a difficult financial climate, to agreeing changes to their working arrangements which can be mutually advantageous - and which may be vital to reduce costs and save jobs.

Imposing contractual change without agreement (or consultation, at the very least) runs the risk of alienating staff and hardening attitudes to change generally. At worst, an employee faced with imposed changes by the employer may resign and claim constructive dismissal, on the grounds that the employer’s actions amount to breach of contract. Even if the employee is unwilling to resign in these circumstances, there is still the risk that they will be deeply resentful of the imposed change and seek other employment as soon as they are able to find it.

Reviewing contracts regularly to ensure that they are a true record of the current working arrangements and using the opportunity to seek employees’ agreement to flexibility or actual changes to contractual terms makes business sense for practices.

After all, we don’t need to tell GPs and dentists about the resentment which imposed contractual variations create! What’s more, industrial action by civil servants about imposed cuts in contractual benefits shows that negotiated change is preferable for both parties to the employment relationship.

Review now – or repent at leisure!

  • Ian Watson is training services manager at Law At Work

Law At Work is MDDUS preferred supplier of employment law and health and safety services. For more information and contact details please visit www.lawatwork.co.uk

For registration, or any login issues, please visit our login page.